By TraderVox.com
Tradervox.com (Dublin) – The Canadian dollar is trading low against most of its major peers after the Bank of Canada indicated that the interest rates may be raised to guard against inflation. Keeping the interest rates unchanged, the BOC Governor Mark Carney noted that modest withdrawal of the current monetary policy may be appropriate. Loonie’s drop against the US dollar was earlier precipitated by speculations that European Central Bank may not spur confidence in the euro zone. In its statement, the BOC projected that the economic growth in the country will pick through next year as consumer spending and business investment increases in the country. The statement also projected a decline in exports as global economic growth slows.
Blake Jespersen, the Managing Director of Foreign Exchange at Bank of Montreal in Toronto, said that the BOC story is consistent with its previous views, which is what everyone was expecting. The increased risk-off mood is pushing the loonie down against major peers. However, technical indicators are showing that the Canadian dollar my breach a four-month high level against the greenback if the Fed and the ECB act on measures to stimulate growth in respective countries. According to Greg Moore, a Currency Strategist at TD Securities, the resistance level at 98.43 is a vital level for the USD/CAD pair. The pair touched this level yesterday and it had previous reached this level on Aug. 21 and 28. Greg predicted that if any of the major central banks moves to make fundamental changes in monetary policy such as monetary easing, the pair could move further down.
The Canadian dollar has failed to drop beyond 99.50 cents per US dollar despite breaking a minor support level at 98.80 after the BOC decision. The currency dropped by 0.5 percent to trade at 99.05 cents per dollar at the close of trading in Toronto.
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